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Collective redundancy consultation - clarity one step nearer?

The Supreme Court has decided that the collective redundancy consultation obligations under s188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (“TULRCA”) applied to redundancies resulting from the closure of a US military base in the UK (USA v Nolan).

This long running case concerns the closure of the US Army maintained watercraft repair centre in Hampshire in early 2006. Mrs Nolan, a civilian budget assistant, brought proceedings for failure to consult under the collective redundancy consultation provisions of TULRCA. At the Court of Appeal stage the USA raised the issue of when the obligation to collectively consult arises under the relevant Directive. In earlier judicial hearings the debate has been whether the obligation is triggered either (i) once the business decision has actually been made and the intention to make employees redundant has been formed or (ii) when the employer is proposing, but has not yet made, a strategic business or operational decision that will foreseeably or inevitably lead to collective redundancies. The Court of Appeal referred the matter to the ECJ for guidance.

Tantalisingly the Advocate General’s Opinion seemed quite favourable to employers, stating that the obligation to collectively consult arises when a strategic or commercial decision is taken which compels the employer to contemplate or plan collective redundancies. He held that it is for the national court to determine the date of the strategic decision, the date when consultation began and whether consultation began in good time. However the ECJ disappointingly declined to provide a ruling on the issue on the basis that it had no jurisdiction to do so, given the exclusion from the Collective Redundancies Directive (98/59) relating to employees of public administrative bodies which it determined applied to military employees.

On return to the UK the Court of Appeal rejected the USA’s argument, based on the ECJ decision, that s188 does not apply to the closure of the military base. The Supreme Court’s judgment, which deals with the USA’s appeal on whether s188 can apply to the closure of a military base, is based on the construction and scope of the relevant UK legislation. It held that TULRCA, as amended, should be interpreted as covering the closure of the military base. It accepted that the legislator may not have realised or foresaw the existence of employees of a public authority consisting of a foreign non-EU member state operating within the UK with its own employees. However the fact that a particular rare situation affecting a foreign state has not been foreseen is no reason for reading into clear legislation a specific exemption which would not reflect the wording or scope of any exemption in European law. The way in which TULRCA had been created and later amended (by the 1995 regulations) meant it applied to both domestic situations and situations within the internal market scope of the Collective Redundancies Directive, and was not ultra vires. The Supreme Court also noted that the US Army could have relied on state immunity when the initial tribunal hearings were begun, which would have been successful.

Although we are still in a period of uncertainty over the trigger for collective redundancy consultation (please refer to our earlier Law Now here), the Supreme Court has remitted the case to the Court of Appeal for a decision on when the duty to consult arose. We hope that the Court of Appeal will take the opportunity to provide some real guidance.

Compare jurisdictions: Employment & Labor: International

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